Howard damns Costello with faint praise

Peter Hartcher Political Editor

PETER COSTELLO may be lampooned by his critics as the greatest prime minister Australia never had, but his true legacy is secure.

Kevin Rudd and Wayne Swan both made gracious remarks yesterday on the announcement that he would retire at the next election, but that was nothing compared to the tremendous valedictory gift they have inadvertently handed him.

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When Costello became the treasurer in 1996, he inherited $96 billion in federal debt.

In 2005-06, it had been paid off, and the Federal Government became a net creditor. The last time that had happened was in 1975-76. On the numbers presented by Rudd and Swan, it will not happen again before 2022.

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That is, he will be the only treasurer in at least 46 years, or more than one-third of the existence of the Commonwealth of Australia, to pull this off.

Unlike Rudd and Swan, John Howard could not bring himself to offer Costello a truly gracious tribute yesterday.

His three-sentence send-off was carefully constructed to give his former deputy no credit for any achievement in his own right: "He was treasurer in a government which left Australia better able to weather the financial storms of recent times than virtually any other nation," Howard wrote.

"That is something of which he and all other members of that government should be immensely proud."

Note that, according to Howard, all Costello's achievements were also the government's achievements.

Howard, not content to deny Costello the leadership for nearly 12 years, is now determined to deny him credit for his treasurership.

Yet Howard himself has conceded that, if not for Costello, the Howard government would have been much less fiscally disciplined. Costello told me in an interview last year that "I had big fights with Howard, all the time" over budget policy. "Politically, [Howard] always wanted to err on the side of further expenditures."

And Howard confirmed this: "Part of the job of treasurer is to resist any additional expenditure, and it's part of the job of the prime minister to insist on it "' he told me.

Costello has other claims to uniqueness in Australian politics: the longest-serving treasurer in the country's history, the treasurer to preside over the longest run of surplus budgets in the country's history.

But it is his record in retiring the national debt that stands out as a truly remarkable accomplishment, not a mere feat of longevity but of real political and policy effort in the face of prime ministerial opposition. And it's precisely this unique credential that made him such a discomfiting member of Malcolm Turnbull's back bench.

As long as Costello was sitting behind him in the Opposition benches, Turnbull couldn't relax. Turnbull knew that, if Costello woke up one day and decided he wanted to be leader, the party would elect him. Today is the first day of his leadership that Turnbull will be able to wake up and breathe easy.

But the departure of Costello as contender will have another dimension. It will give Turnbull more freedom to move towards the centre of politics.

Turnbull, by instinct and by judgment, has always wanted to contest the centre ground, the ground that Rudd occupies so solidly. But every time he moved towards the centre, Costello, a conservative, flexed his party-room muscle and party opinion quickly solidified around his more right-leaning positions.

Turnbull still needs to be wary of the conservative wing of his own party, but Costello's departure will give him greater autonomy than he has yet enjoyed.

So Costello's claim on history is safe. And Turnbull's claim on the future, while certainly not safe, is a little more secure than it was yesterday.